Vermont 2025-2026 Regular Session

Vermont House Bill H0378 Compare Versions

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11 BILL AS INTRODUCED H.378
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55 VT LEG #381015 v.3
66 H.378 1
77 Introduced by Representatives Bartley of Fairfax, Canfield of Fair Haven, 2
88 Bosch of Clarendon, Duke of Burlington, Graning of Jericho, 3
99 Krasnow of South Burlington, Marcotte of Coventry, Micklus 4
1010 of Milton, Priestley of Bradford, and White of Bethel 5
1111 Referred to Committee on 6
1212 Date: 7
1313 Subject: Taxation and finance; education property tax; tax increment 8
1414 financing; municipal and county government; indebtedness; TIF 9
1515 Statement of purpose of bill as introduced: This bill proposes to establish a 10
1616 housing infrastructure tax increment financing program, administered by the 11
1717 Vermont Economic Progress Council, to authorize municipalities to use 12
1818 statewide education property tax and municipal property tax increment to pay 13
1919 for financing undertaken by the municipality, a developer, or a sponsor for 14
2020 infrastructure that will stimulate housing development within a geographically 15
2121 eligible area. 16
2222 An act relating to tax increment financing for housing infrastructure 17
2323 It is hereby enacted by the General Assembly of the State of Vermont: 18
2424 Sec. 1. 24 V.S.A. chapter 53, subchapter 7 is added to read: 19
2525 Subchapter 7. Housing Infrastructure Tax Increment Financing 20 BILL AS INTRODUCED H.378
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2929 VT LEG #381015 v.3
3030 § 1906. DEFINITIONS 1
3131 As used in this subchapter: 2
3232 (1) “Brownfield” means a property on which the presence or potential 3
3333 presence of a hazardous substance, pollutant, or contaminant complicates the 4
3434 expansion, development, redevelopment, or reuse of the property. 5
3535 (2) “Committed” means pledged and appropriated for the purpose of the 6
3636 current and future payment of financing and related costs. 7
3737 (3) “Developer” means the person undertaking to develop a housing 8
3838 infrastructure project. 9
3939 (4) “Financing” means debt, including principal, interest, and any fees 10
4040 or charges directly related to that debt, incurred by a sponsor to pay for a 11
4141 housing infrastructure project and, in the case of a sponsor that is a 12
4242 municipality, authorized by the municipality pursuant to section 1910 of this 13
4343 subchapter. 14
4444 (5) “Housing development site” means the parcel or parcels 15
4545 encompassing a housing infrastructure project authorized by a municipality 16
4646 pursuant to section 1907 of this subchapter. 17
4747 (6) “Housing infrastructure project” means an improvement or 18
4848 improvements authorized by a municipality pursuant to section 1907 of this 19
4949 subchapter. 20
5050 (7) “Improvements” means: 21 BILL AS INTRODUCED H.378
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5454 VT LEG #381015 v.3
5555 (A) the installation or construction of infrastructure, including 1
5656 utilities, transportation, public facilities and amenities, land and property 2
5757 acquisition and demolition, brownfield remediation, site preparation, and flood 3
5858 remediation and mitigation; and 4
5959 (B) the funding of debt service interest payments for a period of up to 5
6060 three years, beginning on the date on which the first debt is incurred. 6
6161 (8) “Legislative body” means the mayor and alderboard, the city 7
6262 council, the selectboard, and the president and trustees of an incorporated 8
6363 village, as appropriate. 9
6464 (9) “Municipality” means a city, town, or incorporated village. 10
6565 (10) “Original taxable value” means the total valuation as determined in 11
6666 accordance with 32 V.S.A. chapter 129 of a housing development site as of its 12
6767 creation date. 13
6868 (11) “Public infrastructure agreement” means a legally binding 14
6969 agreement to develop a housing infrastructure project between a municipality 15
7070 and a sponsor or developer, or both. 16
7171 (12) “Related costs” means expenses incurred and paid by a 17
7272 municipality, exclusive of the actual cost of constructing and financing a 18
7373 housing infrastructure project, that are directly related to the creation and 19
7474 implementation of the municipality’s housing infrastructure project, including 20
7575 reimbursement of sums previously advanced by the municipality for those 21 BILL AS INTRODUCED H.378
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7979 VT LEG #381015 v.3
8080 purposes. Related costs may not include direct municipal expenses such as 1
8181 departmental or personnel costs. 2
8282 (13) “Sponsor” means the person undertaking to finance a housing 3
8383 infrastructure project. Any of a municipality, a developer, or an independent 4
8484 agency that meets State lending standards may serve as a sponsor for a housing 5
8585 infrastructure project. 6
8686 § 1907. CREATION OF HOUSING INFRASTRUCTURE PROJECT AND 7
8787 HOUSING DEVELOPMENT SITE 8
8888 (a) The legislative body of a municipality may create within its jurisdiction 9
8989 a housing infrastructure project, which shall consist of improvements that 10
9090 stimulate the development of housing, and a housing development site, which 11
9191 shall consist of the parcel or parcels on which a housing infrastructure project 12
9292 is installed or constructed. 13
9393 (b) To create a housing infrastructure project and housing development 14
9494 site, a municipality shall: 15
9595 (1) develop a housing development plan, including: 16
9696 (A) a description of the proposed housing infrastructure project and 17
9797 the proposed housing development site; 18
9898 (B) identification of a sponsor; 19
9999 (C) a development financing plan; 20
100100 (D) a pro forma projection of expected costs; 21 BILL AS INTRODUCED H.378
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105105 (E) a projection of revenues; and 1
106106 (F) a development schedule that includes a list, a cost estimate, and a 2
107107 schedule for the proposed housing infrastructure project and projected private 3
108108 development to occur as a result of the proposed housing infrastructure project; 4
109109 (2) develop a plan describing the housing development site by its 5
110110 boundaries and the properties therein, entitled “Proposed Housing 6
111111 Development Site (municipal name), Vermont”; 7
112112 (3) hold one or more public hearings, after public notice, on the 8
113113 proposed housing infrastructure project, including the plans developed 9
114114 pursuant to this subsection; and 10
115115 (4) adopt by act of the legislative body of the municipality the plan 11
116116 developed under subdivision (2) of this subsection, which shall be recorded 12
117117 with the municipal clerk and lister or assessor. 13
118118 (c) The creation of a housing development site shall occur at 12:01 a.m. on 14
119119 April 1 of the calendar year in which the Vermont Economic Progress Council 15
120120 approves the use of tax increment financing for the housing infrastructure 16
121121 project pursuant to section 1909 of this subchapter. 17
122122 § 1908. PUBLIC INFRASTRUCTURE AGREEMENT 18
123123 (a) The public infrastructure agreement for a housing infrastructure project 19
124124 shall: 20 BILL AS INTRODUCED H.378
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129129 (1) clearly identify the developer and sponsor for the housing 1
130130 infrastructure project; 2
131131 (2) clearly identify the housing development projected for the housing 3
132132 development site and identify the substantial completion target for certification 4
133133 pursuant to subsection 1910b(d); 5
134134 (3) obligate the tax increments retained pursuant to section 1910b of this 6
135135 subchapter for not more than the financing and related costs for the housing 7
136136 infrastructure project; 8
137137 (4) provide as consideration offered by the municipality not more than 9
138138 the tax increments retained pursuant to section 1910b of this subchapter; and 10
139139 (5) ensure the municipality pursuing the housing infrastructure project is 11
140140 protected against developer or sponsor failure to perform. 12
141141 (b) A municipality shall provide notice of the terms of the public 13
142142 infrastructure agreement governing the municipality’s housing infrastructure 14
143143 project to the legal voters of the municipality and shall provide the same 15
144144 information as set forth in subsection 1910(e) of this subchapter. 16
145145 § 1909. HOUSING INFRASTRUCTURE PROJECT APPLICATION; 17
146146 VERMONT ECONOMIC PROGRESS COUNCIL 18
147147 (a) A municipality, upon approval of its legislative body, may apply to the 19
148148 Vermont Economic Progress Council to use tax increment financing for a 20 BILL AS INTRODUCED H.378
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152152 VT LEG #381015 v.3
153153 housing infrastructure project. The Vermont Economic Progress Council may 1
154154 approve only applications meeting the standards of this section. 2
155155 (b) Staff of the Council may approve applications submitted to meet either 3
156156 location criterion of subdivisions (d)(2)(A)–(B) of this section, but applications 4
157157 submitted to meet either location criterion of subdivisions (d)(2)(C)–(D) of this 5
158158 section shall require approval of the board. 6
159159 (c) The Vermont Economic Progress Council shall review a municipality’s 7
160160 housing infrastructure project application to determine whether the 8
161161 municipality has: 9
162162 (1) created a housing infrastructure project and housing development 10
163163 site pursuant to subsection 1907(b) of this subchapter; 11
164164 (2) executed a public infrastructure agreement to develop the housing 12
165165 infrastructure project with a sponsor or developer, or both, adhering to the 13
166166 standards of subsection 1908(a) of this subchapter; and 14
167167 (3) approved or pledged to use incremental municipal tax revenues for 15
168168 the housing infrastructure project in the proportion provided in subsection 16
169169 1910b(b) of this subchapter. 17
170170 (d) The Vermont Economic Progress Council shall review a municipality’s 18
171171 housing infrastructure project application to determine whether the housing 19
172172 development plan meets the following criteria: 20 BILL AS INTRODUCED H.378
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177177 (1) at least 50 percent of the gross floor area of the projected private 1
178178 development is dedicated to housing; and 2
179179 (2) the housing development site is located within one of the following 3
180180 areas: 4
181181 (A) an area designated Tier 1 pursuant to 10 V.S.A. chapter 151; 5
182182 (B) an area exempt from the provisions of 10 V.S.A. chapter 151 6
183183 pursuant to 10 V.S.A. § 6081(dd); 7
184184 (C) an existing settlement as that term is defined in 10 V.S.A. 8
185185 § 6001(16); or 9
186186 (D) an area within one half-mile of an existing settlement as that term 10
187187 is defined in 10 V.S.A. § 6001(16). 11
188188 (e) The Vermont Economic Progress Council shall approve a 12
189189 municipality’s tax increment financing plan prior to a sponsor’s incurrence of 13
190190 debt for the housing infrastructure project, including, if the sponsor is a 14
191191 municipality, prior to a public vote to pledge the credit of the municipality 15
192192 under section 1910 of this subchapter. The tax increment financing plan shall 16
193193 include all information related to the proposed financing necessary for 17
194194 approval by the Council and to ensure its viability and consistency with the 18
195195 housing development plan developed pursuant to subdivision 1907(b)(1) of 19
196196 this subchapter. 20 BILL AS INTRODUCED H.378
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201201 § 1910. INDEBTEDNESS 1
202202 (a) A municipality approved for tax increment financing under section 2
203203 1909 of this subchapter may incur indebtedness against revenues of the 3
204204 housing development site at any time during a period of up to two years 4
205205 following the creation of the housing development site. If no debt is incurred 5
206206 for the housing infrastructure project during this two-year period, whether by 6
207207 the municipality or sponsor, the housing development site shall terminate. 7
208208 (b) Notwithstanding any provision of any municipal charter, each instance 8
209209 of borrowing by the municipality to finance or otherwise pay for a housing 9
210210 infrastructure project shall occur only after the legal voters of the municipality, 10
211211 by a majority vote of all voters present and voting on the question at a special 11
212212 or annual municipal meeting duly warned for the purpose, authorize the 12
213213 legislative body to pledge the credit of the municipality, borrow, or otherwise 13
214214 secure the debt for the specific purposes so warned. 14
215215 (c) Any indebtedness incurred under this section may be retired over any 15
216216 period authorized by the legislative body of the municipality. 16
217217 (d) The housing development site shall continue until the date and hour the 17
218218 indebtedness is retired or, if no debt is incurred, two years following the 18
219219 creation of the housing development site. 19
220220 (e) A municipal legislative body shall provide information to the public 20
221221 prior to the public vote required under subsection (b) of this section. This 21 BILL AS INTRODUCED H.378
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225225 VT LEG #381015 v.3
226226 information shall include the amount and types of debt and related costs to be 1
227227 incurred, including principal, interest, and fees; terms of the debt; the housing 2
228228 infrastructure project to be financed; the private development projected to 3
229229 occur because of the housing infrastructure project; and notice to the voters 4
230230 that if the tax increment received by the municipality from any property tax 5
231231 source is insufficient to pay the principal and interest on the debt in any year, 6
232232 the municipality shall remain liable for the full payment of the principal and 7
233233 interest for the term of the indebtedness. If interfund loans within the 8
234234 municipality are used, the information must also include documentation of the 9
235235 terms and conditions of the loan. If interfund loans within the municipality are 10
236236 used as the method of financing, no interest shall be charged. 11
237237 § 1910a. ORIGINAL TAXABLE VALUE; TAX INCREMENT 12
238238 (a) As of the date the housing development site is created, the lister or 13
239239 assessor for the municipality shall certify the original taxable value and shall 14
240240 certify to the legislative body in each year thereafter during the life of the 15
241241 housing development site the amount by which the total valuation as 16
242242 determined in accordance with 32 V.S.A. chapter 129 of all taxable real 17
243243 property within the housing development site has increased or decreased 18
244244 relative to the original taxable value. 19
245245 (b) Throughout the life of the housing development site, the lister or 20
246246 assessor shall include not more than the original taxable value of the real 21 BILL AS INTRODUCED H.378
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251251 property in the assessed valuation upon which the treasurer computes the rates 1
252252 of all taxes levied by the municipality and every other taxing district in which 2
253253 the housing development site is situated, but the treasurer shall extend all rates 3
254254 so determined against the entire assessed valuation of real property for that 4
255255 year. 5
256256 (c) Throughout the life of the housing development site, a municipality 6
257257 shall remit not less than the aggregate tax due on the original taxable value to 7
258258 the Education Fund. 8
259259 (d) Throughout the life of the housing development site, the municipality 9
260260 shall hold apart, rather than remit to the taxing districts, that proportion of all 10
261261 taxes paid that year on the real property within the housing development site 11
262262 that the excess valuation bears to the total assessed valuation. The amount 12
263263 held apart each year is the “tax increment” for that year. The tax increment 13
264264 shall only be used for financing and related costs. 14
265265 (e) Not more than the percentages established pursuant to section 1910b of 15
266266 this subchapter of the municipal and State education tax increments received 16
267267 with respect to the housing development site and committed for the payment 17
268268 for financing for improvements and related costs shall be segregated by the 18
269269 municipality in a special tax increment financing account and in its official 19
270270 books and records until all capital indebtedness incurred for the housing 20
271271 infrastructure project has been fully paid. The final payment shall be reported 21 BILL AS INTRODUCED H.378
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276276 to the treasurer, who shall thereafter include the entire assessed valuation of the 1
277277 housing development site in the assessed valuations upon which the municipal 2
278278 and other tax rates are computed and extended, and thereafter no taxes from 3
279279 the housing development site shall be deposited in the special tax increment 4
280280 financing account. 5
281281 (f) Notwithstanding any charter provision or other provision, all property 6
282282 taxes assessed within a housing development site shall be subject to the 7
283283 provisions of this section. Special assessments levied under chapter 76A or 87 8
284284 of this title or under a municipal charter shall not be considered property taxes 9
285285 for the purpose of this section if the proceeds are used exclusively for 10
286286 operating expenses related to properties within the housing development site 11
287287 and not for the housing infrastructure project. 12
288288 § 1910b. USE OF TAX INCREMENT; RETENTION PERIOD ; 13
289289 SUBSTANTIAL COMPLETION 14
290290 (a) Education property tax increment. For only debt incurred within the 15
291291 period permitted under subsection 1910(a) of this subchapter and related costs, 16
292292 up to 80 percent of the education property tax increment may be retained for 17
293293 up to 20 years, beginning on July 1 of the year in which the Vermont 18
294294 Economic Progress Council certifies substantial completion of the housing 19
295295 development pursuant to subsection (d) of this section. 20 BILL AS INTRODUCED H.378
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300300 (b) Municipal property tax increment. For only debt incurred within the 1
301301 period permitted under subsection 1910(a) of this subchapter and related costs, 2
302302 not less than 80 percent of the municipal property tax increment may be 3
303303 retained, beginning on July 1 of the year in which the Vermont Economic 4
304304 Progress Council certifies substantial completion of the housing development 5
305305 pursuant to subsection (d) of this section. 6
306306 (c) Excess tax increment. 7
307307 (1) Of the municipal and education property tax increments received in 8
308308 any tax year that exceed the amounts committed for the payment of the 9
309309 financing and related costs for a housing infrastructure project, equal portions 10
310310 of each increment may be retained for the following purposes: 11
311311 (A) to prepay principal and interest on the financing; 12
312312 (B) to place in a special tax increment financing account required 13
313313 pursuant to subsection 1910a(e) of this subchapter and use for future financing 14
314314 payments; or 15
315315 (C) to use for defeasance of the financing. 16
316316 (2) Any remaining portion of the excess education property tax 17
317317 increment shall be distributed to the Education Fund. Any remaining portion 18
318318 of the excess municipal property tax increment shall be distributed to the city, 19
319319 town, or village budget in the proportion that each budget bears to the 20 BILL AS INTRODUCED H.378
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324324 combined total of the budgets unless otherwise negotiated by the city, town, or 1
325325 village. 2
326326 (d) Substantial completion certification. A municipality shall promptly 3
327327 notify the Vermont Economic Progress Council upon completion of 50 percent 4
328328 of the housing development projected in the housing development plan 5
329329 developed pursuant to subdivision 1907(b)(1). The Vermont Economic 6
330330 Progress Council shall confirm and certify substantial completion of the 7
331331 housing development against the housing development plan for the purpose of 8
332332 starting the tax increment retention periods pursuant to subsections (a) and (b) 9
333333 of this section. 10
334334 § 1910c. INFORMATION REPORTING 11
335335 (a) A municipality with an active housing infrastructure project shall: 12
336336 (1) develop a system, segregated for the housing infrastructure project, 13
337337 to identify, collect, and maintain all data and information necessary to fulfill 14
338338 the reporting requirements of this section, including performance measures; 15
339339 (2) provide timely notification to the Department of Taxes and the 16
340340 Vermont Economic Progress Council of any housing infrastructure project 17
341341 debt, public vote, or vote by the municipal legislative body immediately 18
342342 following the debt incurrence or public vote on a form prescribed by the 19
343343 Council, including copies of public notices, agendas, minutes, vote tally, and a 20 BILL AS INTRODUCED H.378
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348348 copy of the information provided to the public pursuant to subsection 1910(e) 1
349349 of this subchapter; and 2
350350 (3) annually on or before October 15, submit on a form prescribed by 3
351351 the Vermont Economic Progress Council an annual report to the Council and 4
352352 the Department of Taxes, including the information required by subdivision (2) 5
353353 of this subsection if not previously submitted, the information required for 6
354354 annual audit under section 1910d of this subchapter, and any information 7
355355 required by the Council or the Department of Taxes for the report required 8
356356 pursuant to subsection (b) of this section. 9
357357 (b) Annually on or before January 1, the Vermont Economic Progress 10
358358 Council and the Department of Taxes shall submit a report to the Senate 11
359359 Committees on Economic Development, Housing and General Affairs and on 12
360360 Finance and the House Committees on Commerce and Economic Development 13
361361 and on Ways and Means on housing infrastructure projects approved pursuant 14
362362 to this subchapter, including for each: 15
363363 (1) the date of approval; 16
364364 (2) a description of the housing infrastructure project; 17
365365 (3) the original taxable value of the housing development site; 18
366366 (4) the scope and value of projected and actual improvements and 19
367367 developments in the housing development site; 20
368368 (5) projected and actual incremental revenue amounts; 21 BILL AS INTRODUCED H.378
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373373 (6) the allocation of incremental revenue; 1
374374 (7) projected and actual financing; 2
375375 (8) performance measures developed by the Vermont Economic 3
376376 Progress Council; and 4
377377 (9) the amount of infrastructure work performed by Vermont firms. 5
378378 § 1910d. AUDITING 6
379379 Annually on or before April 1 until the year following the end of the period 7
380380 for retention of education property tax increment, a municipality with a 8
381381 housing infrastructure project approved under this subchapter shall ensure that 9
382382 the housing infrastructure project is subject to the annual audit prescribed in 10
383383 section 1681 or 1690 of this title and submit a copy to the Vermont Economic 11
384384 Progress Council. If a housing infrastructure project is subject only to the 12
385385 audit under section 1681 of this title, the Council shall ensure a process is in 13
386386 place to subject the housing infrastructure project to an independent audit. 14
387387 Procedures for the audit must include verification of the original taxable value 15
388388 and annual and total municipal and education property tax increments 16
389389 generated, expenditures for financing and related costs, and current balance. 17
390390 § 1910e. GUIDANCE 18
391391 (a) The Secretary of Commerce and Community Development, after 19
392392 reasonable notice to a municipality and an opportunity for a hearing, may issue 20
393393 decisions to a municipality on questions and inquiries concerning the 21 BILL AS INTRODUCED H.378
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398398 administration of housing infrastructure projects, statutes, rules, 1
399399 noncompliance with this subchapter, and any instances of noncompliance 2
400400 identified in audit reports conducted pursuant to section 1910d of this 3
401401 subchapter. 4
402402 (b) The Vermont Economic Progress Council shall prepare 5
403403 recommendations for the Secretary of Commerce and Community 6
404404 Development prior to any decision issued pursuant to subsection (a) of this 7
405405 section. The Council may prepare recommendations in consultation with the 8
406406 Commissioner of Taxes, the Attorney General, and the State Treasurer. In 9
407407 preparing recommendations, the Council shall provide a municipality with a 10
408408 reasonable opportunity to submit written information in support of its position. 11
409409 (c) The Secretary of Commerce and Community Development shall review 12
410410 the recommendations of the Council and issue a final written decision on each 13
411411 matter within 60 days following receipt of the recommendations. The 14
412412 Secretary may permit an appeal to be taken by any party to a Superior Court 15
413413 for determination of questions of law in the same manner as the Supreme Court 16
414414 may by rule provide for appeals before final judgment from a Superior Court 17
415415 before issuing a final decision. 18
416416 (d) The Vermont Economic Progress Council may adopt policies that are 19
417417 consistent with the 2015 TIF Rule, as modified by subsequent rulemaking, to 20
418418 implement this subchapter. 21 BILL AS INTRODUCED H.378
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423423 Sec. 2. 32 V.S.A. § 3325 is amended to read: 1
424424 § 3325. VERMONT ECONOMIC PROGRESS COUNCIL 2
425425 (a) Creation. The Vermont Economic Progress Council is created to 3
426426 exercise the authority and perform the duties assigned to it, including its 4
427427 authority and duties relating to: 5
428428 (1) the Vermont Employment Growth Incentive Program pursuant to 6
429429 subchapter 2 of this chapter; and 7
430430 (2) tax increment financing districts pursuant to 24 V.S.A. chapter 53, 8
431431 subchapter 5 and section 5404a of this title; and 9
432432 (3) housing infrastructure tax increment financing pursuant to 24 V.S.A. 10
433433 chapter 53, subchapter 7. 11
434434 * * * 12
435435 (g) Decisions not subject to review. A decision of the Council to approve 13
436436 or deny an application under subchapter 2 of this chapter, or to approve or 14
437437 deny a tax increment financing district pursuant to 24 V.S.A. chapter 53, 15
438438 subchapter 5 and section 5404a of this title, or to approve or deny a housing 16
439439 infrastructure project pursuant to 24 V.S.A. chapter 53, subchapter 7 is an 17
440440 administrative decision that is not subject to the contested case hearing 18
441441 requirements under 3 V.S.A. chapter 25 and is not subject to judicial review. 19
442442 Sec. 3. EFFECTIVE DATE 20
443443 This act shall take effect on July 1, 2025. 21